Financial Planning is an ongoing process to help you make sensible decisions about money to achieve your goals in life. It is the task of determining how you will afford to meet your personal life objectives. A time shall come when your income sources may not be able to replenish your wallet so it is prudent to be ready for unforeseen financial constraints. Soon you will be leaving campus and maybe you were living in a hostel thereby its essential to start saving for a bed, gas, mattress etc. Here are 5 ways that a university student can be better equipped to handle their finances.
1. Create a budget /spending plan
A budget is an estimation of revenue and expenses over a specified future period. It is used to control income and expenditure, set a scale of preference, provide direction and monitor performance among others. Using a small notebook, note down the expected revenue periodically from all consistent sources e.g. pocket money from parents, relatives, or from other income generating activities. Next, write down the things you need for a specific period i.e. expenditure. This may include bus fare back and forth between school and home, lunch, shopping, airtime etc. One should note down every single expenditure expected. Try as much as possible not to spend outside your budget, unless it is necessary and cannot wait for the following period. This way, you maintain a good record of your accounts such that every day the cash at hand/bank should reconcile with the budget balance to keep a good track of your spending.
2. What you need vs what you want expenditure
A university student wishes to buy everything only that money lacks. For effective financial planning, you need to reduce your expenditure. Budget only for what you need and not for luxury items. For things such as lunch, one can try having lunch at the school dining hall, as opposed to eating out at a restaurant. One does not have to buy a high rated brand product that is expensive yet there is a cheaper alternative of the same quality. Avoid impulse buying, instead, save the few shillings that remain. Live within your limits; one does not have to buy something expensive just because their friends are doing so. Remember, you have different income levels same as life goals. Avoid the fear of missing out as this can drive your decisions as opposed to objective rationale. Before you spend, ask yourself; is it necessary right now?
3. Large scale shopping
It is expensive to purchase a quarter kg of rice every so often in comparison to buying a full kg at once. Adopt a habit of doing shopping maybe once per month or per semester depending on your income level. Find out where to buy things at a cheaper price around your area. If in Nairobi, you can get cheap yet quality clothes and foodstuffs at Eastleigh or Gikomba and Githurai respectively. A bucket of potatoes goes for Kshs. 350 – 450 at Githurai, some green grocery items that you buy from ‘mama mboga’ go at a throw away price there. You can store the items in the house so that even when your income will be less you will not have to worry about food.
4. Get a side hustle
A university student have a lot of idle time after classes. One should something to do that will bring in more income. Time is money; we need to account for it. One can try various activities that may earn some extra cash such as; online writing, making jewellery, hair plaiting/braiding, product activations/promotions for companies during the weekends, and online marketing. Social media is also a great platform to buy and sell goods online. One can also be a sales agent for a firm like Jumia; this way you will get a good commission for every sale you make. Do not stay idle, look for something to do, account for every minute of your time.
5. Avoid gambling
Gambling seems like the new thing in town amongst campus students. You find students not concentrating during a lecture because they are busy on their phones betting then start blaming lecturers for bad grades. We have also witnessed several cases of students who decided to bet with their school fees only to lose then proceeded to commit suicide. Any amount that remains from daily expenses goes to betting instead of savings. Taking that Kshs. 50 that you use to bet every day and saving it for a 4-months semester duration will end up with earning you Kshs. 6,000. This is enough to pay for CPA Part 1 exam fee. In place of betting, save the excess amount then channel it to activities that add value to your career.
In conclusion, a university student can engage in the savings plan challenge for effective financial planning. I have developed one for an average university student who can afford saving Kshs. 20 a day. However, this can change depending on one’s income level. When you buy Sukumawiki in the evening, save the remaining amount instead of buying unnecessary snacks every now and then. Consider saving Kshs. 20 a day for a semester. You will have saved Kshs. 600 per month, Kshs. 1800 quarterly and Kshs. 7200 per year. Instead of buying tops and shoes every now and then that don’t last long, why don’t you save for future purchase of a good interview suit or something else you wish to have?